How Trump’s tariffs could hand trade leadership to China

 In U.S.
President Trump said he wants to “protect our country and our workers” by placing stiff tariffs on imported steel and aluminum. But the move risks ceding U.S. global economic leadership to China for years to come, some analysts and experts are warning.

“If implemented, the steel and aluminum tariffs would represent one of the most lopsidedly self-destructive U.S. trade policy decisions in recent memory,” Ryan Hass, a fellow at Brookings Institution’s John L. Thornton China Center and the Center for East Asia Policy Studies, wrote in an email.

Other experts agree with that assessment. Charles Hankla, an associate professor of political science at Georgia State University, wrote at the economic website The Conversation that the policy is “dangerous for the U.S. economy and for the international system.”

Hankla added, “If the U.S. abdicates as champion of the international trading system, China may be the only country that can take the reins. The question is, what would that mean for the current system of open and free markets?”

Mr. Trump on Friday seemed resolute to take that step, tweeting in support of trade wars, even after warnings from governments including China, Mexico, Canada and the EU.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” he tweeted.  “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

That didn’t sit well with most global trading partners, including China.

“In recent years, the global economic recovery has been sluggish and the steel and aluminum industries in various countries are facing difficulties,” China’s foreign ministry spokeswoman Hua Chunying said during a briefing Friday. “All countries should cope with the situation together and work with each other to explore solutions instead of taking trade restrictions unilaterally and profiting oneself at the expense of the neighbor.”

The U.S. is the world’s biggest steel importer. Last year, China was the 11th biggest steel exporter to the U.S., according to the Department of Commerce’s International Trade Administration. China has been accused of flooding the market with cheap exports. Yet steel and aluminum make up just more than 2 percent of total U.S. imports, according to Capital Economics.

There’s more at stake than metal industry-related jobs. China was the top U.S. trading partner in 2017, according to U.S. Census figures. The country also held the most in U.S. debt at the end of 2017, according to the U.S. Treasury, at $1.18 trillion, ahead of Japan’s $1.06 trillion and Ireland’s distant $326.5 billion. 

Hass added, “The tariffs will hurt the U.S. economy, cost U.S. jobs, and create inflationary pressure. By doing harm to U.S. allies, this action also undermines America’s ability to attract support for an effective, multilateral strategy for dealing with China’s unfair trade practices.”

In essence, Hass noted, Mr. Trump “has given China a gift.”

On Friday, markets seemed to agree, sinking for a second day. Boeing (BA), consistently the biggest U.S. exporter, fell 5 percent. Sales to China accounted for $11.9 billion, or about 13 percent of the company’s total sales last year. Boeing in September raised its forecast for the Chinese market to $1.1 trillion over the next 20 years. That’s up from $1 trillion for the same forecast a year earlier.

Aluminum is a key ingredient in aircraft manufacturing. Boeing and European rival Airbus may soon be facing a rival from the Commercial Aircraft Corp. of China in the form of that country’s C919 jet. Its first delivery is planned for 2021.

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